Finance Fundamentals for High-Growth Startups w/ Mosaic

ABOUT THIS EPISODE

It’s easy for CEOs and founding teams to get caught up in the minutiae of growing a startup and lose sight of building a robust finance function.

But if you design it well from day one, it can free up the bandwidth for you to tackle the more complex issues that crop up during the startup journey.

In this episode, special guest host Steve Lord, Head of Burkland’s CFO, Fintech, and Knowledge Share Practice, speaks with the founding team from Mosaic about how to effectively build out a finance function, including the people and resources needed to make it successful.

Our guests are:

-Bijan Moallemi, Co-Founder & Chief Executive Officer

-Joe Garafalo, Co-Founder & Chief Operating Officer

-Brian Campbell, Co-Founder & Chief Product Officer

Topics covered:

-How and when startup founders should build out a finance team

-How the tech stack should develop alongside finance

-The challenges of systems integration

This discussion with Bijan Moallemi, Joe Garafalo, and Brian Campbell was taken from our show Startup Success. The Mosaic founding team can be found on LinkedIn:

https://www.linkedin.com/in/bijanmoallemi/

https://www.linkedin.com/in/joe-garafalo-b3492a27/

https://www.linkedin.com/in/bcampbell89/

And on their website: 

mosaic.tech

If you want to hear more episodes like this one, check us out on Apple Podcasts.

If you don’t use Apple Podcasts, you can find every episode here.

Listening on a desktop & can’t see the links? Just search for Startup Success in your favorite podcast player.

Welcome to start up success, thepodcast for startup founders and investors here you'll find stories ofsuccess from others in the trenches as they work to scale some of the fastestgrowing startups in the world stories that will help you in your own journeystart up. Success starts now hello. Welcome to start up success.Today we have a real treat. We have Steve Lord, the head of Berkely's CFOFintech and knowledge share practice hosting again, and he has all of the COfounders of mosaic with us. So I'm going to turn it over to Steve who willintro the guests and get going for what will be a great conversation thanksSteve and welcome awesome thanks gate appreciate you having a support againand welcome guys thanks for doing this with us. I'm joined here today by BijonMolem for he's the chief executive officer of mosaic and then Jo Garafollow chiep operating operas officer and Brian Campell, who is the chiefproduct officer, so welcome aboard guys, as you guys know, we really enjoygetting actual folks in the field talking about Fintech and talking aboutthe innovations that have happened in that sector and the impacts that notonly what their products are doing into that world, but the whole arc ofFintech and how that's changing how startups operate. You know, there's theold saying that it's not really that old, but there's a pretty common sayingthat everybody's, a Fintech now right doesn't really matter what your startupis doing. You're, probably more of a Fintech than you think your customersare consuming Fintech. Your product is probably integrating in Fintech andyou're in your business, probably using Fintech at some level to run yourcompany so super topical, and thanks for joining thanks for having USdecided to be here. Yeah appreciate He. My right thanks at what I'd like to dois just kind of kick off a little bit. You and I have talked a lot about howyou all started in this business and a little bit of the arc that got you towhere you are one of the best elements of that story.I, like is that you guys, felt and- and you know suffered through the need that yourcompany is now trying to meet in another environment and to me those arealways great start up story. So if you could tell me a little bit about youknow, how did you guys meet? Won't you? Would you start doing that led you tothe idea of starting was a yeah, so our genesis goes back to totwo thousand and twelve, when the three of US met over at a company calledpounds, Europe in the bay area and when we joined alatee was a relatively smallcompany and we were kind of the first way. But Finance Ires have problemshere and we were kind of charged with making sense of a company that wascoming through this really cool phase of hypergraph and me and finance werekind of sleeping at our desks every night trying to make sense of what wasgoing on across the company. That was scaling so quickly right. So you are feeling those spreadsheets that tend to leave a mark. The faster the company is growing right andtrying to provide information to stakeholders at a pace that the systemjust wasn't able to track that about right. Yeah, that's exactly right, a lot ofreally Califorian S, a lot of miscall trains and I think very quickly. Whatwe realize is when you have a company and hyper growth as great as you mightbe at Excel and VC here as a wizard, I don't know many fogs that are betterthan I sell than him and you still can't keep up with the business rightand right Joe. Like sees this phrase, I'm going to steal it from him on thefinanced. No one wants to read last month's newspaper, so rice, you keep upwith the pace of the business and actually accelerate and provide theright data to the right people in a way that they can understand. When thatinformation still tightly, then you're not doing your job, not doing your jobyeah yeah. We have that conversation actually quite a bit with founders,where we say finance in a way is actually a communications function aswell as a you know, math and numbers function, because you have to providethat story to the people that have to...

...make the decision. So, if you can'tcommunicate it, if you're, not if you're giving them stuff that you can'tunderstand or, like you said, isn't usable because it's six weeks old, yeah yeah, you touch them. Something thatthat we definitely live is a calendar is Walstein, I think, maybe at not.Every one has experienced where we would spend hours days weeks. Buildingthese amazing models, or at least we thought they were amazing, and then youget in to get in front of the Co and if it doesn't make sense to him, thenwhat's the point right, what ave you done righi think. Ultimately, it's notjust about doing the work on a time Li basis. It has to be digestible onsetsof to to other considente across the business, and I think there there's aninteresting point there. Most finance tools are going to spit out threefinancial statements and typically three financial statements. EvelineStatin, a cash flow is not how the business thinks about the business thatyou have to be able to present things in a way that different folks canunderstand a different alities yeah, and we run into that too often likesome sass customers, baby again running into six o six and some of these otherrevenue recognition modules and it just gets very hard for them to understandcash in the bank doesn't necessarily mean revenue right. So what what ledyou guys to the idea for mosaic was it was? It is really as simple as you guyswere sleeping under your desk, and you knew that other people were probablydoing that. Or can you walk us through a little bit like what made you decideto go? Hey. You know, there's a business here, so I causer t e the waywe saw the problem as we got out of Excel. You know so ever on the base webuilt around eighty nine graces as packed in this is back in two thousandtwelve ton. Thirteen. There was a lot of tools out there, and then we had tohave a lot of the time to get of visualize. What on the Tay was that waskind of the initial justice and over the years that we were there? We likereally build us out into like a fully flesh, PRI, think e Ou te taple out itwas a. It was busily sweet of like a Finance Mot tool that people are crossup, a were locking into from the seals pipe line to bud tracking. Whatevermight have been it was all in there. We were proud of it and we we think in atit like you, he be it s, you just doing your job right, yeah. I think one ofthe cool things a mot it was, if you did it, was like about. We had all thisextra time to pole on tin e, to really sit down and talk to the differentbusiness leaders and help them be better. So if we had a better sincewhat was going on his this and that that's really where this kind of likestrategic finance came from is once you could automate a lot of the basic stuff,you can be more strategic with the business is being our language, but we,yes, we let alter and we're you know did think anything of it honestly andwe all behastin difference at e back companies, and that was when we realizewell we're back to Excel A. I well see no one else, as this yeah exactly it'skind of Bas recedin. You know this newer technologies, which you can talkabout, but it was still this huge process to like build this hole in thestructure of your own kind of finance, tate a platform while you're stillabout age, you're trying this wain a you know you really touch on somethingthat we try to stress a lot and I think for everybody. Listening on thispodcast, if you're started founder, it's really very important tounderstand this. What you guys did and what you just described, is really thewin from from your perspective, when the systems can provide you, theinformation you need, it opens up time and brain space to be able to thinkfurther down the road and actually think critically about where you wantto go, and that is you know it's so easy for CEOS and founding teams to getcaught in the Munita of trying to do all this sort of stuff they if at bestthey put finance on the back burner until it's two eight and then it's ascramble and everybody's running around trying to get numbers together fortheir VC partners or whatever. But if you build it and you do it right, youactually have all of this extra capacity to tackle the real problemsright or the more complicated problems.

That's really a very, very importantelement to me, and we see it happen all the time that finances Administravit to the giftedsort of developer or consumer market, or you know these books are usuallyreally good at whatever the company does, but they're not experienced,maybe running the company that does it. How do you guys kind of leads to one ofmy other questions when and how do you suggest? Startupfounders begin taking building out the finance team seriously and obviously welook at it and say the earlier, the better, but practically what have yourun into there? Yeah I'm going to stick by that answer that I think the earlierthe better, which is as soon as the business is started. You need someprofessional health and finance. Usually that is best done through likean outsource, accounting, firm or out or CFO, but day one. The business isstarted. You should have somebody taking this stuff pretty seriously. Yea,like you mentioned something earlier to that, like the finance job, is really acommunications one. We have a very similar take our spin on it is that thefinance team is a customer service organization for the rest of thebusiness right. When you think of you think finisthrough that Lens, how can finance make your development team more efficient?How can I make your selves function? Closed deals, paster, that's what youcan really kind of take this offensive approach to finance versus this backoffice. Administrative function, so really thinking through that mine isfrom day one puts a different perspective on. How do you build yourfinance organization and what is a yeah? I totally agree and- and we dooften say do it now, when it's small and easy and not very complicated rightbecause doing it later after you should have already had it and going backwardin time will cost you a ton of money, a lot of aggravation a lot of time to goback and you know reconcile two years of operations so eh. How does that,when, in your experience in the startups that you work with, I totallyagree as early as possible? But what does that team? Look like you know,walking it through? Maybe by stage a little bit I mean obviously two kids ina laptop living at their mothers, that they don't need a full on finance teamlike how do you guys view that as it grows like? What's the what's the teamsscale like as the business scales, so I would say, even at the two persons stage right assoon as there's transactions and anything that will happen highlyrecommend that they start working with with the burgled. You need those, youneed your books closed, and I do think that finance at this date. It shouldnot be the priority right it is pending. In the background, you need to focus onyour product. You need to focus on customers, bd everything else that goesinto starting a company, but but right around the time that you're starting to get revenue andyou're starting to build a team and you're more than a handful of those. Itis really when I think you can start to take a more offensive posture tofinance, and so it's at that time that I would recommend. First founders startto get kind of more schooled up on whether it's metrics understanding,budgets and forecasting- and I say right around that series- a inflectionpoint when you got a a big ambs on your board, they're asking for a five yearplan all these metrics that may be founders, kind of know, or don'tnecessarily know that that's probably right around the time when I wouldsuggest bringing some of that function in house, maybe not the bookkeepingaspect of it, but bringing in a Sedaine for an office person that has the canget their hands dirty with with some of the finance day today, right yeah, Iwas a a I do, is the kind of person are looking for that the first T as hire issoon who's. analyte minded an operation ly by this, and how can they makethings more efficient as how can they make it a cleaner? You know you are onhave extra cantigas working with you...

...that on your books should be up to date.You Know Er there, but closing the books. As you know, there's one way toclose the books that don't add Botuto the companies is all needs to belooking through the trying to pull that information and give that back to thebusiness. So at that first person is more about the anlis more about theoperations and starting to like think about like how on find it had backt thebusiness and then support you s s Bo or not her yeah. It's almost. I progressover procedure right, like closing the books as a procedure, but progresscomes when somebody uses it the right way to look at context and efficiencyand decisions to be made, and I agree with you: We try very hard to be ableto provide that sort of context in the fractional role, but eventually thatperson has to come inside like there there's too much happening. Otherwise,we tend to see that usually in the B plus C minus round stage, when it erlypays to bring in that person full time, so there's just kind of pushing alongthat further. When you look at adding in those teamfolks and working with maybe fractional resources to all that, and then youbring it over to the text stack that supports finance. What do you guysthink about that? Where do you see the texts developing alongside thatfinancial function as the company grows, you guys lived it in multiple versions.Right, you lived in a Palender, you lived it at the companies you were atfor that now, you're living it with mosaic, not only yourselves but all ofthe companies you're working with. How do you see that shaping up, especiallywith all of the Fintech Tech Innovation? That's happening out there yeah good question that there's a lotgoing on. I I say the obviously when you're looking atdifferent point solutions, so your age or Istory system or your ax has been o.You got to just make a judging call based on the quality of that system. Acouple things I would absolutely kee into is, and I'm always be thinkingabout: How can you not just solve that poles and I just do Rell, but how canyou solve because your overall operational clot within Bianca, how dothese systems connected each other? So how is your age or system connect? Yourour piece de Centis hat isn't automatic and you hook up this thanks. This soncan get through regularly, so you don't have to as a benefit the more you canactually act, your systems to each other, a better of yer, an be there's,a less actual work. You need to do and you can focus more on and of what'shappening. So you know if you're using expensive by or air base, whatevermight be, make sure you're. Looking at how those connection this is, wealready have Asiasat be a part of it is that is that, where you see a lot ofcompanies stumble right there yeah, I see himself there. I would saythe other thing. I see those double ones. They do the most basicconnections out these things, just kind of the most primitive and there's a lotof value. It just kind of upfront think about where you want to be a year ortwo for now and start collecting that made up ahead of time. So, for example,if you're a five personal company, don't really need to fervente. You know,but like a couple o years from now and Jason Moraes or an like, I don't knowhow many technical or not technical people are coming for. Twenty peoplehave how much you been span got engineering. Well, you haven't beentagging that he ever the beginning. You know you know have an a lot that it isthat it's not work tack. It's like you just kind of set it up in this system afront and it just kind of flows through naturally. So one of the way I thinkabout it is seir systems connect to each other, and I just put in as muchbrain there a provided that is as automatic but men. You will kind of figyourself litter and then just continuing that Joe Little Bit. Likeone thing we hear a lot about is these CA. CEOS and founding teams are veryshy about doing that sort of thing because of the on boarding time itmight take right yeah. We want to get all this connected and we want all theAPIS shaking hands and all that's great, but it's a six month process or three,but they're very shy about that. Do how do you guys deal with that? And what doyou? What's a good, a good sort of metric for folks out there to thinkabout the cost versus the benefit there yeah. I think when we think aboutscaling finance historically, I think...

...the way that we've all done, that is byadding people and then spending more hours and begins working making somematters in reachee with some more advanced lookups and than some EPS. ButI think, if you defend e time like right in said a thin, an yer out andimplement those tools, the right way, the technology can actually take thatzero value had work away from you to give you more time back to you rightwhat we were talking about before yeah. Exactly and then Brian on the on theproduct side looking out that year or two down the road. How how much I meanthis sounds like it's easy question, but it's probably more complicated thanI think should the product guys should the folks that are actually buildingthe thing and are the ones that are going to be responsible, probably forhelping sink all of this stuff together. Even if that's, even if you know vendorx, Y Z, comes and says hey, I can do all this for you, the technical folksat the company are usually the ones that are dragged in there. How do youECONFINNA T and should those guys be involved in those early planningconversations of where we want to be a year or two down the road got it's akind of like the internal pay team, almo yeah, exactly yeah yeah, so Ithink we'll just have to two phases. I think that the first pace we talkedabout sex has a fines team choosing the system to help you do your job and recharge system and connected to those and then usually those connections. Youcan find them and set them up all montage way. An you do need to betackin person to do that. Right now was you do these connections that they isstill in the systems are talking to each other. That's great still got adownload on and to CSB in an xl kind. O do your do your announces there, and sothe next phase to me after that is like okay, the extension of our text, thatit's not just your your work, Flos, tough payroll, your expenses but likehow you actually kind of makes sense of all the at so it has to me- is thestuff about, like downloading data and doing a xcels you've got to set up adatabase. You got to have a guy, sucking it out of your differentsystems or r Cook Bush, O you're a into the database. You got to build your ownlogic, sequel pick out whatever it is to make sense of that data and thenhave analize on top of it. So jaspar tools, looker capital, you knowwhatever it is Mellousi there yeah he's a pletely distorted process that willsuck resources from her from your nothins people at a super, a team. Ifyou have a for engineering whatever and it not les it to suck their resourcesof the company, use his control over it like as a finance team. You kind of arenow dependent on this other team and they have their own. You know cobs, andthings are trying to do right and then they're trying to build the product ofthe company right whatever it is exactly so then just become a superpainful. You know back and forth and thinks low down n. You know yeah,that's where we see a lot of companies like as they start scaling and they'rerealizing. Okay, not only this finis doing their job, but we need to knowwhat finance now like as a company. We need to understand how many people wecan hire this year were run out of my oprer. Getting to that test feelingbase company. You need that financed, and then it's just downloading CSP,twenty four seven! Until you get to this kind of automated world and that'sreally hard to build or a answer, your question Yeah No, I did totally andthat's where some of these platforms are really coming along, because welook at that all the time like to your point, the question of how many peoplecan we hire before we run out of money? I mean that's where the CFO comes in,but even there it is such a moving target. If the company is growingquickly, it all depends right and making sure and I've run in this.Personally, you have to have very frequent and comprehensive coordinationand sinking between those teams which, over a period of time, starts gettingkind of not very popular amongst those other teams because they feel likethey're, helping finance do their job. You know so again back to technology,the more that can all be gone inside a single platform, the better cool, so just kind of taking that one morestep- and this is kind of or all three of youguys you've seen this probably happen. We'vecertainly seen it that we feel it all...

...the time, and I think part of whatmosaic is doing is helping alleviate this a little bit, but the role of theCFO has really changed in the last ten years. Maybe right, we've gone frombeing primarily the numbers folks who reported the board meeting and all thatto now being in this is what Berlan really focuses on that sort ofstrategic wing man to help the management team make good decisions notonly just in finance but in the whole operational art of the business. Youtouched on one of these things earlier, I'm going to get to a question here assoon I promise the the CFO has become increasingly insystems manager right. What? What do you see? Those demandslooking like for Cos out there for management teams if they don't have aCFO or if they're, utilizing, bookkeeping or fractional resources?How do you see that systems integration, presenting different challenges tothese teams from a finance function and how that role has shifted, yeah, really great question there. Ithink the three of US definitely agree and when we think about kind of thespace and what's happened over the last ten of fifteen years right andeverything just moved to the cloud and and so ten or fifteen years ago, youhad these big bulky Europe systems. The whole premise of the ERP was the onestop shop for the enterprise. It doesn't matter who you are or when yourwork clot is. Everything is going to get done in these tools and now, oncethe kind of the rise of the cloud. Now you got these best of breed systems.These point solutions that are really good for kind of Ownin, a specific workfloe like sales course for sales themes, marquette for marketing, right theywere Pegasi and so on and so forth, andwhat's happened to her is for those individuals on those teams that areresponsible for managing the systems is made them more powerful at their jobsas made their day to day easier. But, but what is it actually done forfinance right now? Instead of the data that you need being in one system, thedata that you need to really be strategic is in five or more sere, andif you're spending all your time as BC was alluding to Brian, was leading topulling data out of different systems cleaning it not being it updating,Excell Philes, moving o Er formulas. You were never going to have time toactually look at your business strategically and make an impact, andso I think, ultimately to your point. The role of the CFO has become atechnical function here and in this D and Age, if you don't understand data,you don't understand how these systems need to talk together. It's really hardto make a strategian. The business has a CFLS and I think it ends up getting you know. Every every one of those hopshas arr likelihood or there's a risk of problems and lost in translation typesof issues that pop up, because you are trying to sent a picture or stitch aquilled out of six different sources right yeah on one common example thatthat we use is the definition of a customer right. A customer will startas a prospect in your marketing system. At a certain point, they're more realwill be an opportunity in a sales force, you're going to know the rep the dealamount when it's finally closed by then it goes to your building system, wheregoing to know details around envois days to Ville amounts in voicingschedule and then finally, it's going to come to rest in your year, beysnommer, you have radio to Fer, rubbing, you etcetera and if you don't have kindof a cohesive, clear definition of what a customer is, how to stitch all thatdata together, you're going to go into meetings with these different businesspartners and spend ninety percent of the time disagreeing on definitions andwhat the numbers are. Instead of actually making an impact that eriesjust one example of one one definition...

...here, there's many other financialterms that stretch across all these different systems that youfundamentally have to be a line gone across the business. In my first weekof my last, Greece, company pay ready for for being within a thirty page.Like tack, there was three different cussword outs because sales, a goodones, life es like they're, all slightly different, because no one is agran. How on the customer account and just even a lot of hen like just athree hundred and sixty gree view, a pub a customer like which I e CusterMarca, you know, is there any commonality and what's happening there?What example I have reis? Is there there's a specific sal frap that wasbasically kind of lying in the sales process? But we didn't realize thatuntil because you know the day is in different places of the balises and notconnected its also, you didn't see it yeah, I e muchos. It was like he becomeale of all these like customers. Is this one got in so like little thingslike that? You, whose winer days in different places and you're at poingtogether, yeah- and I think the only person with that vantage point that cansee that whole journey is the C F right and if they can't use that vantagepoint to make the company great then they're not doing their job and to usethat finish planet it has to evolve in need to be more more technical, yeahand the CFO has to have the head for it. Are you seeing it shift out there Imean we are as CFO providers like we, we see increasing appreciation for that.Are you guys saying say: How's The bigger thing is: There's a deeperappreciation for the AUBAIN. That should be there that still not there somost minare, still in exle and there's this kind of a general sentiment likecome on like where with art wool, and so we see that all the tit, then we seea lot of US fers. You know we deal with. It was a er they're deciding about whatwe're doing our side about what builds of are for that very recenter. There'sthis passive need that everyone can see. It's fine, please he had at to replaceExcelsis, but there's a lot of automation and improvement that kind oftech we can throw at it yeah I mean well sefo's, there's a lot of a Nursiathere when it comes tixo you know excel is what all of us have grown up with.We know it well and we trust it do. Do you guys, I mean speaking candle. Doyou do you sense push back there when you go to a company that has a the CFO,you know not as young as me, you know, but maybe a little. I do. You guys feelthat, like the CFO s, the last person who wants to bring in your tool to beon thus, I would say, is less than we would have expected. Two years ago, Ifancowe when it comes down to it. Itsel Google Sheets Rosen columns, are alwaysgoing to be a tool in the tool kit. Now the problem is for the last twentytwenty five years. All other aspects of the company have got in great tech, andthis has been the only to ortol kid. So I think what folks are seeing this day and ageis: Let's actually leverage software where possible, to make our work leseasier and let's use this tool at the appropriate time rather than trying tojam, but a round peg into a square pole. Is that make sense a totally heardquestion earlier about God, a willingness and fos appetite for thistechnical skill step. Our thesis is like we should give the tooling to cFos that gives them this technical skill set. I already have to know atone about a D as six o six and revere standards like they shouldn't, have tolearn how to write python and build a opiyo there's just enough on theirplate, so the software should actually give them the skill that they otherwisewouldn't have yeah and often in our world. The CFO that's working with astart up is also trying to stay abreast of all of the other things that cansometimes land on a CFO is dack right, hiring insurance right all this otherstuff that somebody has to worry about, and often that ends ends up being Co.And so do you see, like that's the biggest value ad, that sort of modernCFO can bring to a startup, using tools like yourselves being open for havingthose conversations and utilizing technology to automate these moremundane tasks.

Absolutely, and I don't think it's onlyuntil it's like mose great there's, a lot of other really good tools outthere. Trying I from a personal example like at Palante, one of the things thatslow us down the most was trying to get approvals on stand to implementing afool like cooper, really helped us make that process much more seamless. We hadtwo thousand a blaze with credit cards so like how can we do two thousandexpense courts every month for a month and close how to be onody? Thoseprocesses there's things like team pay and air base, and ramp and rex thatthat are all helling CFO s become more efficient sure and it's one of thosethings and youalls have too many choices. Now, when you're the averageCFO at at a firm in that area, right, there's all these corporate cards andvirtual cars there's a there's. This whole world out there and I think,increasingly c Fos- are kind of a little overwhelmed with all of thedifferent technology choices they can take. One of the things that we'reseeing starting to happen is that they are beginning to consolidate a littlebit right, so you're getting more than just virtual cards in a platform you'restarting to see it stitch together, a little bit more and more so that's beenhelpful. LOOK THE GUYS! This has been great. I think we're just about setanything that we didn't cover that we should have, or anything else, you'dlike to ask onere yeah thanks for having us, we love, Berkley, huge pansand anything any way we can be helpful. We love to be thanks guys for joiningus on the PODCAST. It's really been informative. How can listeners reachout to you if they're interested in learning more about the platform yeah listeners can figure beach out tous on? Your website was a not tack or you know, I said Info aposiopetic greatthanks again. This has been another episode of start up. Success podcastfrom Berkly, and thanks will see you all next time. Thank Pranav beenlistening to start up success to make sure you don't miss out on futureepisodes subscribe to the show in your favorite podcast player. Like would youhear tap a number of stars? You think the show deserves an apple podcast formoree tools and resources for your own start up. SUCCESS CHECK OUT BERGLANDASSOCIATES COM. Thank you so much for listening till next time.

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